European and US markets continue to move up with large gains
DIIs continued to defend the markets
India China border conflict- uneasy calm serious escalation
Indian markets are getting more volatile
FIIs sold again yesterday
Global Markets: Sharp up move
Both US and European markets continued to move sharply higher again yesterday. This shows that markets have reconciled with virus pandemic is new normal that markets and economies need to live with. Risk assets such as Emerging market currencies, high yield bonds, and MSCI Emerging Asia ETF traded in US rose yesterday. The Dollar index and gold consolidated. Copper continued to trend lower from recent swing highs.
ASIAN Markets this morning: - Mixed and sideways
Asian markets are mixed this morning and most of the markets are trading sideways. SGX nifty is trading about 50 points below Nifty’s yesterday close.
There is no significant calendar event planned for today.
India: Border tensions
This time bullish mood on global markets did not carry Nifty higher very far. The escalation in the border tension is causing volatility. FIIs continued to sell yesterday also while DIIs offered support at lower levels and brought the Nifty back up. India seems to be facing several problems including economic, pandemic and border tension. However, the bullish global mood is holding up Nifty so far.
Will Nifty be the next casualty of the border tension?
Right now, the dominant market narrative for India is border tension. Indian army’s willingness to immediately publish higher death toll and subsequent communication shows that Army is ready to take on higher toll and stay aggressive. However, things have cooled down at the moment. Also, two or more days of continues conflict is a low probability event.
The global risk on mood should also help Nifty from falling steeply. Upside is possible if there are more de-escalatory news on the border situation from the government and FIIs moderate their net sell position in cash market .
There are no heavy weights declaring results today.
NIFTY -Technical Bias:
Price Action & Pattern:
Border tension caused extreme volatility yesterday. Markets are likely to stay on the edge, nervous today. Nifty managed to hold the low of 9700 for the past two days in the face extreme volatility. Therefore 9700 seems to be a strong short-term support. In case of any indication of calmness returning on the border, Nifty may again break above 10k.
Since markets are likely to be range bound today, any spreads that will benefit from raise in volatility is appropriate